European Commission Investigates J&J and Novartis

The European Commission claims that Johnson & Johnson and Novartis may have breached European antitrust rules.

The EC has issued a Statement of Objections, a formal step in the investigation process, with the preliminary view that an agreement concluded between Janssen-Cilag and Sandoz, subsidiaries of J&J and Novartis, respectively, delayed the market entry of generic versions of the painkiller fentanyl in the Netherlands. Fentanyl is a strong painkiller that is used to treat patients with severe pain.

In a statement, the EC explains that a “co-promotion” agreement may have been made between Janssen-Cilag and its generic competitor Sandoz in July 2005.

“At the time there were no regulatory barriers to develop and market generic versions of the fentanyl patches and therefore for Sandoz to enter the Dutch market,” said the EC. “The agreement foresaw monthly payments from Janssen-Cilag to Sandoz for as long as no generic product was launched in the Dutch market.”

Sandoz did not enter the generic market with fentanyl patches for the duration of the agreement, which lasted until December 2006.

"If our preliminary conclusions are confirmed, the Dutch subsidiaries of Johnson & Johnson and Novartis entered into a so-called 'co-promotion' agreement to avoid competing against each other, depriving users of fentanyl in the Netherlands from access to a cheaper pain killer,” Joaquín Almunia, Commission Vice President in charge of competition policy, said in the statement.

The EC first began investigating the companies in October 2011.

J&J and Novartis have been informed in writing about the EC’s objections. The companies can now examine the documents in the investigation file, reply in writing and request an oral hearing to present their comments. If there is sufficient evidence of a breach of a antitrust rules, the EC can issue a decision prohibiting the conduct and impose a fine of up to 10% of a company's annual worldwide turnover.

Competition in the pharmaceutical sector

The EC has been keeping a close eye on potential breaches of antitrust rules through the European pharmaceutical industry ever since an inquiry in 2009 indicated “a number of structural issues and problems in companies' practices that potentially led to distortions of competition and delays to the entry of new, innovative and cheaper generic medicines into the EU market”. In particular, the inquiry found that originator drug companies may be paying to delay the market entry of generic medicines.